China's R&D expenditure reaches record high

China spent a record CNY3.09 trillion on research and development (R&D) in 2022, a 10.4% year-on-year increase. The National Bureau of Statistics (NBS) said that China’s R&D expenditures accounted for 2.55% of GDP last year, which is 0.12 percentage point higher than the previous year. The percentage of R&D spending is close to the average of 2.67% among Organization for Economic Cooperation and Development (OECD) economies. China climbed to the 12th place globally, ahead of France with 2.35% and the Netherlands with 2.32%. “Despite multiple unfavorable factors, China’s R&D expenditure continued to soar and injected strong vitality into the nation’s innovative development. Notably, the investment in basic research continued to grow rapidly,” said Li Yin, Chief NBS Statistician. Last year, the country spent CNY195.1 billion on basic research, a year-on-year increase of 7.4%. “Accelerated efforts will be made this year to again beef up R&D expenditure, especially in some self-developed innovations, and to improve the quality of the overall R&D, so as to offer stronger support for tech breakthroughs,” Li said.

According to China’s 14th Five Year Plan (2021-25), the country will scale up spending on R&D by more than 7% annually during the period to drive more technological breakthroughs. Consultancy McKinsey and Co said in a report that such a growth target will set the country on the path to becoming the world’s largest spender on R&D. In the first three quarters of last year, Contemporary Amperex Technology Co (CATL), China’s largest electric vehicle battery maker, spent CNY10.58 billion on R&D, representing a 130% increase. “R&D investment will remain a priority for CATL. We will continue to invest heavily in the R&D of power batteries for more innovations to help drive the electric vehicle sector,” said Meng Xiangfeng, Assistant to the company’s Chairman.

Last week, the Chinese government took a number of measures to encourage foreign investors to set up R&D centers in the country. They will be supported in establishing open innovation platforms, financing, and participation in national scientific and technological missions and programs. Related departments and provincial-level authorities were also urged to pave the way for introducing overseas talent. “China has had a very clear and focused strategy over the past decade of investing in high-level research and development,” said Maximilian Foerst, President and CEO of Zeiss Greater China. “In other parts of the world, research budget cycles often change with economic conditions. When the economy is not good, the government pulls back,” Foerst said. But in China, there has been constant R&D investment, he said, adding that this may be one of the reasons why companies would like to increase investment in China, the China Daily reports.